Sean Ryan and Kirby Lee Davis
Dolan Media Newswires
The vote Thursday and Friday by Mercury Marine workers in Fond du Lac has communities in two states facing the same fear of losing hundreds of jobs — and gain cavernous, vacant buildings.
The company is threatening to leave Fond du Lac and move some production operations to Stillwater, Okla., if the 850 machinists in the Wisconsin union again reject Mercury’s cost-cutting proposals. But if the Fond du Lac workers accept the contract (PDF), Mercury could move workers from its nonunion Stillwater plant to Wisconsin.
Last month, the workers rejected the contract offer. Last weekend, Mercury said the deadline to accept the offer had expired at midnight Saturday before a second vote was finished.
“The obvious effect is the loss of 1,000 jobs, or whatever it is,” said John Pfefferle, owner and president of real estate firm Grubb & Ellis/Pfefferle, Appleton. “But what they don’t talk about is the peripheral companies.”
Fond du Lac County could lose 5,900 jobs and the 250 companies whose businesses are tied to Mercury’s 1.9 million-square-foot plant and headquarters operation, according (PDF) to the county’s economic development corporation.
The consequences would be less severe for Mercury’s 735,000-square-foot Stillwater plant. Employment there already fell from 1,100 to 385.
But the ripple effects could leave many wounds.
Josh McKim, executive director of economic development for the Stillwater Chamber of Commerce, said closing the facility — an option Mercury spokesman Steve Fleming said is not under consideration — would affect 1,710 jobs in all. That would clip $84 million in personal income from the state, as well as $500 million in manufacturing output.
White elephant in the room
A departure from Stillwater would leave the community of 40,000 with a huge, empty industrial building.
“That’s almost rural,” said Jamie Hill, industrial specialist with CB Richard Ellis of Oklahoma, of the Mercury Marine facility’s site. “Rural properties stay on the market for 12 to 18 months. It could be longer.”
Mercury’s departure from Fond du Lac would come at a terrible time for the local industrial real estate market. Pfefferle said there is little demand for such properties in the area.
“To dump some additional industrial market in this particular climate is a big order,” he said. “We’ve got a Kimberly-Clark plant — a 900,000-square-foot site — that’s on the market right now, and there’s not much going on with that.”
There are more vacant industrial sites around Fond du Lac now than there have been in the past 15 years, said Patrick Connor, senior vice president and branch manager for the Fox Valley office of developer NAI MLG Commercial. A huge site, such as Mercury’s in Fond du Lac, must be refilled a bit at a time with smaller companies moving in over a long period.
“For that type of vacancy, it can take a year or two or longer to backfill the building,” he said.
In hopes of keeping Mercury’s Oklahoma building active, the Stillwater Chamber has developed several scenarios to help Mercury sell or redevelop the property, from splitting it into two adjoining buildings to subdividing it into an industrial park.
“Ultimately, Mercury Marine is going to retain ownership of that building and will decide what to do,” McKim said. “We’re going to have to work closely with them no matter how they decide to go. But the building doesn’t hold its value if it’s not being used.”
Propelling a city’s image
The problems of losing a large employer go beyond vacant buildings and lost jobs. It becomes harder to attract new companies after a large company leaves.
People move away, so there’s no work force to attract companies, and the area loses its luster to other manufacturers, NAI MLG’s Connor said.
“From a real estate perspective, it’s a positive thing to have a large, successful manufacturer in the marketplace,” he said. “It brings respect to the community and to the area.”
Stillwater real estate executives remain optimistic.
“We have had plants that moved out before,” said Marsha Teague, owner/broker with Heritage Real Estate, Stillwater. “We have had buildings go vacant before. We certainly have survived as a community.”
Naturally, the preference in Stillwater is to look at Mercury’s potential relocation of the Fond du Lac manufacturing operations and, perhaps, its 1,000-employee headquarters.
Real estate agents in Fond du Lac look at it from the opposite perspective. Connor said the vast majority of business growth in Wisconsin comes from existing companies because large manufacturers rarely move in. If Mercury stays, it’s likely to keep growing.
Yet, Connor said, there is a thin silver lining around Fond du Lac if the company leaves. The vacant properties all around the region are driving down the price of leasing or buying industrial land, making it easier for startup companies to flourish.
“When large companies make decisions,” Connor said, “then a number of employees say, ‘We are good at what we do. Maybe we can make a new company.’”
Sean Ryan is a staff reporter for The Daily Reporter in Milwaukee. Kirby Lee Davis is the Tulsa bureau chief for The Journal Record in Oklahoma.